Featured

A "Love-Hate" Relationship With Pfizer Options

Pfizer options often disappoint however there are times when they can be your best friend. Let me try and explain. First look at it's five day chart. The 24.50 series of Calls have more than doubled in price in two days. Volatile stocks like this in this price range attract an inordinate amount of attention when it comes to option trading and it only flares up during these brief periods when the stock has these extreme price moves. Look at the open interest in this one series of Calls below. It's quite substantial. Now for a simple calculation. If the stock moves up today to $25.00 these $.37 cent options on the 24.50 series of options will probably move up to the $.55 cent range. Buy and sell let's say a block of 25 contracts and you will be rewarded with a nice gain. Now let we share this one observation. Here is a look at how the D.J.I.A. traded yesterday. It was down. Who wants to be holding short term Call options overnight if the markets are souring? Wouldn't t...
Post a Comment

Netflix Pulls Off A Monday Morning Rally And Two Back To Back Friday Afternoon Rallies. That Plus My Thoughts On All Of This Action

In a recent blog I talked about Costco taking off upwards on a late Friday afternoon. This time this blog is partly about Netflix resetting itself on a Monday morning. Netflix often makes big moves on Fridays and big moves on Monday mornings. I call it getting rebalanced. Playing the Monday moves is often not as rewarding as playing the one day Friday options because included in the option pricing is a time value component. You are paying for the luxury of five days of trading time. That makes them more expensive.
Can you see a $25.00 morning bounce from it's early morning trading lows?
I call it returning to normal. One week ago I talked about Costco shooting up on a Friday afternoon starting at about 1:30 p.m. I posted a detailed blog about it's incredible jump. Here is the chart I showed before it started to jump up.
Here is how it then closed the day.
Options purchases at 1:45 p.m. which was the period of time I highlighted on the chart paid off on spades at 3:00 p.m., perhaps the best situation I witnessed on the week. My point is Monday mornings and late Friday afternoons are often sweet spots for playng options on this stock. Now yesterdays action on Friday September 19th which carries the same theme. Here is it's one day chart.
Let's image you were lucky enough to be looking at the 1210 series of Calls around 10:15 a.m. That's when this series of Calls was trading at it's lows of the day. Here is how that series of Calls then closed on the day.
The higher up "out-of-the-money" Calls posted even more impressive gains. Here are two examples.
Is it possible for anyone to pinpoint in advance when these types of moves will happen? I think people with a passion for option trading are more in tune with knowing where to look for this kind of action. Look at the upwards jump on Pfizer last week on Wednesday Sept.17th. I did a blog catching it's biggest one morning jump of the week. I showed it's Call option prices just before and just after it's big move. Go back and read that blog if you wish.
Can I teach the world to play options? Not really. I don't want to encourage others to make reckless trades. It's a sea of sharks out there. I can only show you snippets of the action. It remains a continous learning game for everyone.

Comments

Post a Comment

Popular posts from this blog

Waiting For A Drop On The Opening On Bad News - Eli Lilly

Image
Here is the bad news. The company is Eli Lilly. How bad is this news? Well look at it trading in the premarkets. So what do I think? I think the news is a setback of sorts, but not really all that bad. The stock is going to open lower, that's a given. It's like trying to play Boeing after an announcement that an airplane has crashed. So the stock is going to crash and it might have a small rebound and then it's going to slide down some more. A test of sorts will happen sometime in the afternoon. It might stock falling but then where will it go from there? The best case scenario is a recognition that investors got it all wrong and the stock ends up flat on the day. Yet there might be more of a downward dumping of the stock on the close followed by a selloff on tomorrows opening. Should option players be jumping in to play the upside on next week's Calls? That is the question. Here is a look at Boeing on the days after a crash. Day two after the crash was equally as ...
Read more

News on Polestar , Lucid (Trading After A Reverse Stock Split) Plus Ford News And Vinfast

Image
Look at the one year chart on Polester. Now it's one month chart. What's going on? It's confusing. It was down $.36 cents on the week. If you want you can spend $.20 or $.25 on Puts and hope that the company goes under in the next five or six months. They recently raised more money by releasing more shares so it's running out of options. You can't run at a loss forever and this news will most likely scare off potential new car buyers. This actually is a low number of outstanding Put options. The consensus seems to be that it is not game over yet. Lucid started trading this week on a "one-for-ten" reverse stock split. Here is its one week chart. It was down $1.39 on the week. It's also going to struggle. Both of these stocks have challenges ahead. On a more positive note here is a chart that looks kind of perky. Ford on the week. The stock was down $.03 cents on the week and it was the 3th highest in share volume trading on the NYSE. It appears...
Read more

A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

Image
Some say to think small, not big. Trying to play Disney options is thinking big. It is a stock slightly out of favor. If we start with it's a three year chart, we will see it is down by about 50% over that period of time. Now it's one year chart. If the stock can break 110 in early 2024 the sky is the limit. It does have a lot of moving parts so anything could happen. Look at these Calls options one year out. One year in options buys a lot of time.They look reasonable. If the stock ever inched up to the $105.00 price level in the three or four months these options would jump up in price by about 50%. Even more if they had really good news. Yet it's the "what-if" aspect of the equation that castes such a trade in doubt. "What if" stories just don't cut it. There are to many variables in play. Then again, why are we even thinking of long-term Call options after a December's rally? Let's switch gears. If consumers are out spending for X-ma...
Read more